All you need to understand is the true valuation of the company given recent financials. 2.5x current sp seems reasonable today, which yields a 10 billion dollar valuation. That is 5x current rev’s, again reasonable given their growth rate. Peer comps will guide you.
However,
China FUD will play a part in real upside potential until it’s no longer a CNBC headline.
The OTC playground we trade in will hold this down and will manipulate the sp until we relist. So the true valuation argument will not hold water until we relist and SEC/China regulatory FUD resolves. Centurium’s majority share hold creates some concern and uncertainty as well.
Relist will bring tutes and an IPO type surge. Tutes will lock down shares and stabilize the sp at a much higher level. Fundamentals will then create the trading range, along with continuing growth expectations and forward-looking global expansion.
Comp:
SBUX
Stagnant to negative growth, retracement in China, store count decreasing, bottom line shrinking. COG’s and unionized employees wreaking havoc on profit,
24 P/E, $100B MC. No room to grow.
Luckin,
incredible tech savvy growth model, expanding store count & revenues, growing bottom line, no debt, profitable, $4B MC which is ridiculous.
Catalysts galore….Relist, China FUD dissolves, COVID China lockdowns dissipate and reveal real rev potential, constantly increasing store count, global expansion vision, internally sourced and controlled COG’s, sustainable labor. All things needed in order to help maintain and grow margins.
Do the math. Clearly some risks remain, but the reward could be 10x in the not to distant future. Comparing the current state of this company to it’s notoriously ill-fated Fat Lu version that ran to $50 IPO, would be like comparing Hertz to Avis/Budget. This is the new Luckin. She is severely undervalued given some headwinds. If and when those headwinds resolve, this is a $40-50 stock with ease.
